States Brace for Impact of Health Reform

State eNews Issue #37 | January 6, 2010

As states brace for changes that could come with federal health care reform, many state officials are concerned about the cost.

But that’s only part of the challenge, said Alan Weil, executive director of the nonpartisan National Academy for State Health Policy based in Washington, D.C.

“Obviously states are struggling under the burden of financing programs they already run,” Weil said. “The notion that they’re going to be able to turn all their energy into this expansion and all these new exciting things is, I think, unrealistic.”

The premier issue of Capitol Ideas, The Council of State Governments’ bimonthly magazine, formerly State News, explores the potential impact of federal health care reform as well as efforts by states and industry to contain costs.

Policy choices now pending in the reconciliation of the House and Senate versions of reform could have tremendous impact on states at a time of unprecedented budget gaps.

South Dakota Gov. Mike Rounds, the 2010 CSG president, worries that the added number of people getting services at discounted rates could have the unintended consequence of raising costs for others.

“Medicaid pays, at least in the upper Midwest, about 50 to 52 percent of the billed charges,” he said. “Physicians and facilities, both doctors and hospitals, will pass on or cost-shift that unpaid balance onto the private sector, which will make it more difficult for the private sector to continue to pick up their costs of health care for their employees.

“That to me is a very challenging situation which in the long-term will mean more uninsured.”

But as governors and legislators across the country grapple with budget woes, their number one concern may very well be the additional costs they’ll be expected to bear, especially when it comes to additions to their Medicaid rolls.

“States right now are very challenged with budgets in which revenues are down and expenses for existing Medicaid populations are up,” said Rounds.

Alabama Sen. Vivian Davis Figures, a Democrat and co-chair of the CSG Health Policy Task Force, voiced the same concern about money as her Republican counterpart on the task force, Kentucky Sen. Julie Denton.

“It’s going to be a financial hardship on many states throughout the country because right now many of us are in deficits,” Figures said. “Our revenues are down more than they ever have been historically, and I find it very hard to have a new expense when we are not even taking care of current expenses.”

Denton said potential mandates for coverage would hurt an already strapped Kentucky budget. “If they were to expand Medicaid and not send dollars to cover costs … that would put us in a very bad position,” she said.

Look for the January/February issue of Capitol Ideas to learn more about what state leaders have to say about potential impacts from health care reform, as well as cost drivers, prevention efforts, health information technology and more.

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